REFILE-GLOBAL MARKETS-Shares decline; U.S. data and Spanish woes weigh

by on September 28, 2012 2:40 pm BST

Fri Sep 28, 2012 10:40am EDT

* Spanish bank audit, French budget in focus
    * U.S. data pushes stock markets lower

    NEW YORK, Sept 28 (Reuters) - Stocks fell and Spain's
borrowing costs rose back above 6 percent on Friday, as initial
optimism on Madrid's new debt cutting plans gave way to anxiety
over its troubled banks, France's finances and faltering global
    A report showing business activity in the U.S. Midwest
contracted this month for the first time since September 2009,
as new orders sank, added to pessimism [ID:nN9E8KD077}
[ID:nL1E8KS5BX} and prompted losses in U.S. stocks to extend and
the dollar to pare losses against the euro. 
    Stocks around the world, as measured by a MSCI index
, were down 0.5 percent. Madrid's IBEX 
led the falls, down 1.2 percent, as the early lift from Spain's
new round of spending cuts, which had also boosted U.S. and
Asian markets overnight, collapsed.
    "On this last day of the quarter, the focus remains on the
situation in Europe, which is causing nervousness," said Peter
Cardillo, chief market economist at Rockwell Global Capital in
New York. 
    The Dow Jones industrial average was down 105.27
points, or 0.78 percent, at 13,380.70. The Standard & Poor's 500
Index  was down 9.44 points, or 0.65 percent, at
1,437.71. The Nasdaq Composite Index  was down 18.82
points, or 0.60 percent, at 3,117.78.
    Despite Friday's losses, the S&P has advanced around 5.5
percent over the past three months.
    Spain will remain in focus, analysts said, with the results
of an independent audit of the country's banks to be published
later in the day, while Moody's Investors Service is expected to
finish a rating review which may cost Madrid its sovereign
investment grade status.
    The 10-year Spanish bond last yielded 5.98
percent with the peak at 6.079 percent. 
    France is also under the microscope with President Francois
Hollande's fiscal credibility on the line. His first annual
budget, France's toughest in 30 years, raised taxes to bring in
30 billion euros ($39 billion) to keep deficit-cutting promises.
    The single currency, fell 0.1 percent to $1.2896 as
risk aversion rose. 
    The benchmark 10-year U.S. Treasury note was up
12/32, with the yield at 1.6129 percent after the U.S. data. 
    "We had been seeing good data recently, but now we seem to
be following the slowdown in China and Europe and we're seeing
weakness," said Paul Nolte, managing director at Dearborn
Partners in Chicago.